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Why trading forex is not for everyone

Written by: PaxForex analytics dept - Monday, 26 May 2014 0 comments

Trading forex is a relatively new asset class for the general public and has only really become possible for most of us since the late 90's when many of us started getting the internet connected at home. Since broadband connections became standard practice a huge number of people have had all the technical requirements they need to start trading forex - just open an account online and they can trade with the click of a mouse.

The bad news for many newbie traders is that just because they can, doesn't mean they should trade, and unfortunately many find that out the hard way. They start trading with no education or experience and lose their cash very fast. These failed traders spread the word that all traders lose money and that trading doesn't work. Just because it didn't work for them obviously it doesn't work for anyone else in their minds.

For sure trading foreign exchange on margin carries a high level of risk and may not be suitable for everyone. Before deciding to trade foreign exchange you should carefully consider your investment

objectives, level of experience, and risk appetite. As a new trader you should understand that you could sustain a loss of some or all of your initial investment. This means that you should not invest money that you cannot afford to lose.

When considering forex trading as a profit making venture it is important to work out good trading strategies beforehand if it’s possible. Making decisions regarding your forex trading and developing a strategy can be seen as your foundation. With your strategy you will optimize your risk with respect to the expected reward or put the odds in your favor; if you treat forex as the quick scheme to get rich then you are sure to fail.

Just because there are many traders who do make money in forex trading or just because the spreads or the transaction costs are actually very low, and it is very simple and easy to open an account and access the forex markets, doesn’t mean it's a place where the everyday person can get rich quickly. The reality of the matter is that trading is like any other profession; it takes practice, discipline, experience and hard work.

Laino Group register number 21973 IBC 2014. Risk warning: Please note that trading in leveraged products may involve a significant level of risk and is not suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary.

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